Dollar Index slides for the third day, STI advances ahead of earnings season

Asian equity markets rebounded sharply yesterday, led by the Nikkei 225 which rallied 3.6%. Nikkei futures continued to go higher after the cash market closed.

Market sentiment shifted to the positive side as crude oil recovered its losses to stand above $40 again. The US market finished higher as IBM delivered better-than-expected Q1 earnings.

Singapore’s earnings season will kick off this week. Local investors and traders will be watching the Q1 earnings results of the biggest local companies in the coming weeks for clues as to how economic headwinds have affected corporate earnings.

The sentiment is optimistic, as the Straits Times Index advanced 34 points or 1.1% to its highest level this year ahead of earnings season. It has broken out through the key resistance level of 2,917 and this has opened the door for potential upside momentum, with the next resistance level at 3,038.

Chinese companies accelerated the pace in the overseas M&A race. According to an unidentified source, the country’s sovereign fund - China Investment Corp - has expressed interest in buying Yum! Brands Inc’s Chinese business, which includes over 7000 KFC and Pizza Hut restaurants on the mainland. This deal is potentially valued at $7-8 billion.

Commodities
Crude oil futures rebounded as the strike in Kuwait continued to dampen crude output in the short term. US crude futures settled 3.3% higher at $41.08 per barrel.

The panic associated with the failure of the Doha meeting will gradually fade away and the market will start to look forward. Gold continued to trade in a range bound between $1,220 and $1,260. A potential ‘head and shoulder’ pattern has formed, however, which warns of potential downside if the earnings season brings positive surprises that quench the demand for safe-haven assets.

FX
The US Dollar Index has fallen for the third straight day, approaching a key support level at 94.00. A weaker USD sent other currencies higher, with AUD/USD trading at ten-months highs.

USD/JPY has rebounded to 109.10 this morning. The immediate support level is 107.65 and the resistance is 110.00. USD/CAD retraced back to 1.2770 as the oil price rebound lifted commodity currencies. AUD/USD extended its rally and hit 0.7800 this morning, a fresh high this year. USD/SGD also pulled back to the 1.3400 area.

US Dollar Index June 2016

Earnings Calendar for Singapore blue chips

Company Name

Date

Period

EPS Estimate

CapitaLand Ltd

20/4/2016

Q1 2016

0.05

Singapore Exchange Ltd

20/4/2016

Q3 2016

0.085

Sembcorp Marine Ltd

27/4/2016

Q1 2016

0.021

United Overseas Bank Ltd

28/4/2016

Q1 2016

0.435

Oversea-Chinese Banking Corp Ltd

29/4/2016

Q1 2016

0.215

Jardine Cycle & Carriage Ltd

29/4/2016

Q1 2016

0.54

Yangzijiang Shipbuilding Holdings Ltd

29/4/2016

Q1 2016

0.15

DBS Group Holdings Ltd

03/05/2016

Q1 2016

0.42

Sembcorp Industries Ltd

04/05/2016

Q1 2016

0.058

StarHub Ltd

05/05/2016

Q1 2016

0.045

Ascendas Real Estate Investment Trust

05/05/2016

Y 2016

0.152

SIA Engineering Co Ltd

10/05/2016

Y 2016

0.162

Wilmar International Ltd

10/05/2016

Q1 2016

0.04

City Developments Ltd

11/05/2016

Q1 2016

0.14

Singapore Airlines Ltd

12/05/2016

Y 2016

0.669

UOL Group Ltd

12/05/2016

Q1 2016

0.115

Golden Agri-Resources Ltd

12/05/2016

Q1 2016

N.A.

Genting Singapore PLC

13/05/2016

Q1 2016

0.008

Singapore Telecommunications Ltd

13/05/2016

Y 2016

0.243

Singapore Technologies Engineering Ltd

13/05/2016

Q1 2016

0.04

SATS Ltd

13/05/2016

Y 2016

0.202

ComfortDelGro Corp Ltd

13/05/2016

Q1 2016

0.031

Thai Beverage PCL

13/05/2016

Q1 2016

0.29

Global Logistic Properties Ltd

19/05/2016

Y 2016

0.048

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